corsi burn
WHoutsider here WHinsider has been huffing his own farts!
"Immediate Gratification"-Bias Is Real!
January is the time to make your fiscal fitness resolutions for 2021.
Most promises we make to ourselves will be a memory by February. Want a fiscal fitness head start and get 2021 going STRONG on the right foot? Here are 9-steps:
#1: A thorough portfolio review with an objective financial partner is timely.
Have you ignored your long-term asset allocation or the mix of stocks, bonds, and cash? With the major stock indices close to new highs, your allocation specifically to stocks may have grown disconnected from your risk tolerance.
Complacency is the emotional foible du jour. After all, every market dip appears to be a buying opportunity. With volatility subdued, investors head blindly overconfident into equity markets.
A financial professional, preferably a fiduciary, can help make sense of how your portfolio’s risk has changed and provide input on rebalancing or selling back to targets for what could shape up to be a very different 2021.
#2: Sell your weak links (losers), trim winners.
Consider tax harvesting where stock losses are realized (you may always purchase the position back in 31 days) and shed profits from winners. Going against the grain when the herd is chasing performance takes intestinal fortitude and investment acumen counterintuitive to the masses.
Candidly, tax-harvesting isn’t such a benefit to overall portfolio performance. However, the action of disposing of dead weight is emotionally empowering, and if gains from trimming winners can offset them, then even better.
Per financial planning thought-leader Michael Kitces, the economic benefit of tax-loss harvesting is best through tax-bracket arbitrage. The most favorable harvesting scenario is a short-term loss offset by a short-term gain (usually taxed at ordinary income rates).
#3: Fire your stodgy brick & mortar bank.
Let’s face it: Brick & mortar banks are financial fossils. How many times did you enter a bank branch over the last five years? Banks won’t be in a hurry to increase rates on conservative vehicles like certificates of deposit, savings accounts, and money market funds even when (if) the Fed raises rates again.
Virtual banks like www.synchronybank.com provide FDIC insurance, don’t charge service fees, and still offer savings rates above the national average.
Accounts are easy to establish online and electronically link to your existing saving or checking accounts to transfer funds.
#4: Get an insurance checkup.
Unwelcome consequences for financial health can arise due to holes in your insurance coverage.
Risk mitigation through insurance is crucial to reduce “financial fragility,” when a life-changing event not adequately prepared for creates an overall collapse of a household’s fiscal state.
Risk mitigation, analysis, and insurance consideration are more crucial than ever before, especially in light of the pandemic.
https://www.zerohedge.com/markets/immediate-gratification-bias-real